7445_70-73_INNOVATION.qxd 16/9/08 14:16 Page 51
INNOVATION ■
‘
By Frances Buggy
‘Open innovation introduces new
practices that could at first be
regarded as highly risky, but which in
fact transform a business radically if
the managers of an organisation are
open-minded enough
IN the last issue, when exploring the innovator’s dilemma, went further by placing its PhD researchers with client
it became clear that the issue of balancing a combination organisations to solve client problems in client organisa-
of effective, steady state innovation management with tions/locations. Demonstrators showed technologies to
working to develop the capacity to create relevant mar- clients in an environment that looked like an office,
ket disruption is a tall order for organisations of any size, clients played with the products and saw how they
but for ambitious SMEs it may be even more difficult worked. IBM called this programme ‘Extended Business
because their cycles are shorter and working capital Opportunities’. In this way, it did not put all its eggs in
demands may naturally lead to a more short-term view. one basket, but worked with a variety of companies and
There is a possible answer to this dilemma to be was ‘open’ in a very thoughtful way.
found in the principles of open innovation as outlined by However, Chesbrough issues a caveat for smaller busi-
Dr Henry Chesbrough of the University of California, nesses, indicating that while small companies need to be
Berkeley. His recent book, Open Business Models: How to open innovators to be successful, they need to be careful
Thrive in the New Innovation Landscape (2006), is based not to be too open. Otherwise, one large company can
on his research on the innovation practices of large capture their business rather than a small company
multinational companies. Open innovation describes a capturing aspects of the larger business.
new approach to managing industrial innovation in the I first came across a similarly open approach to inno-
21st Century, in which firms work with external part- vation in the late Nineties when I worked with BT and
ners to both commercialise their internal innovations became aware of its Brightstar Incubation programme,
and to obtain a source of external innovations that can which was run out of the BT Labs in Martlesham. The
be commercialised in turn by the company concerned. Brightstar programme involved BT encouraging compa-
Chesbrough says: “It captures the idea of introducing nies of varying sizes to enter into licensing agreements
new practices that could at first be regarded as highly exploiting BT’s accumulated wealth of intellectual prop-
risky, but which in fact transform a business radically erty in the form of patents which had not yet been
if the managers of an organisation are open-minded exploited into market reality. As a result, many symbiotic
enough.” relationships were formed and more innovations were
He quotes the example of IBM to illustrate this launched than might have been the case had these
approach – it opened up its patents and licensed its tech- collaborations and licensing arrangements not occurred.
nology to create multiple research alliances to share the In the mobile phone industry, large multinationals
high costs and risks of creating new technology. It then which compete head-to-head, such as Nokia and Sony,
September 2008 Knowledge Ireland 71
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